AutoNation Growing Through Attrition

As the number of dealerships decline, AutoNation (NYSE:AN) grows through the attrition.

In my interview with AUtoNation CEO Mike Jackson, he said then he was content to sit back and let his market share grow through attrition.

Is it just the current economic state that is causing dealership to close? Yes and no. The number of car dealerships has been shrinking more or less constantly since 1990. In fact, car dealerships have been disappearing steadily since 1947, when their numbers peaked at around 47,000 nationwide. By the end of 2008, the National Automobile Dealers Association estimates that just 20,000 will remain.

Consolidation is the real driving force. In 1947, most car dealers carried just one brand — Packard or Studebaker, for example. Now, the average dealership carries two. So the number of car dealerships isn’t likely to rebound with the economy, as consolidation continues in good times and bad.

It is clear the current economic malaise has cause this effect the accelerate, substantially. But, it is also clear this is a long term trend and that Jackson has his company, along with Berkshire (NYSE:BRK.A) holding CarMax (NYSE:KMX) positioned to be the principle beneficiaries of it.